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Irish banks’ deposit guarantee to be withdrawn due to banks’ recovery
| Published: | 25 Mar at 6 PM |
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Tagged: Ireland
The deposit guarantee brought in by the Irish government four years ago to protect savers and investors is about to be withdrawn as it’s felt that the banks are now stable.
Known as the Eligible Liabilities Guarantee Scheme, the deposit protection is due to end on 28 March. Its closure will affect anyone with deposits in the Bank of Ireland’s Isle of Man subsidiary Permanent Bank International. The Bank of Ireland itself withdrew from the scheme in summer 2012.
Those affected will still be covered by the Isle of Man’s own deposit protection scheme, but this only guarantees $50,000 of savings. According to Irish Minister of Finance Michael Noonan, significant progress is being made in breaking up negative links between the state and the banks, with the withdrawal of the guarantee is seen as another step forward.
Noonan explained the country’s banking system had failed the Irish people, with its mismanagement costing taxpayers a massive €62 billion. Government strategies over the last two years, he added, have gone a good way to repairing the damage caused by the banking crash.
The minister feels the emergency measures are no longer necessary as the banking system is approaching normal. The only exceptions to the closure of the scheme will be fixed deposits not due to mature before the scheme ends, which will be covered until maturity.
Even so, savings rates offered by Irish banks are at an all-time low, causing an actual loss of capital due to inflation. Returns are continuing to fall although the base rate has remained steady for several years, giving inexperienced savers needing retirement income little choice than to sail the uncharted waters of investment advice.
Known as the Eligible Liabilities Guarantee Scheme, the deposit protection is due to end on 28 March. Its closure will affect anyone with deposits in the Bank of Ireland’s Isle of Man subsidiary Permanent Bank International. The Bank of Ireland itself withdrew from the scheme in summer 2012.
Those affected will still be covered by the Isle of Man’s own deposit protection scheme, but this only guarantees $50,000 of savings. According to Irish Minister of Finance Michael Noonan, significant progress is being made in breaking up negative links between the state and the banks, with the withdrawal of the guarantee is seen as another step forward.
Noonan explained the country’s banking system had failed the Irish people, with its mismanagement costing taxpayers a massive €62 billion. Government strategies over the last two years, he added, have gone a good way to repairing the damage caused by the banking crash.
The minister feels the emergency measures are no longer necessary as the banking system is approaching normal. The only exceptions to the closure of the scheme will be fixed deposits not due to mature before the scheme ends, which will be covered until maturity.
Even so, savings rates offered by Irish banks are at an all-time low, causing an actual loss of capital due to inflation. Returns are continuing to fall although the base rate has remained steady for several years, giving inexperienced savers needing retirement income little choice than to sail the uncharted waters of investment advice.
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